HomeMy WebLinkAbout04124 - US FILTER MOU WASTE WATER SVC MO 6458 Kathie Hart
From: Marcus Fuller
Sent: Friday,April 01, 2016 9:29 AM
To: Kathie Hart
Cc: Tabitha Richards;Jay Thompson
Subject: Re:A4124-US Filters
Yes
Marcus L. Fuller, MPA, PE, PLS
Assistant City Manager/
City Engineer
City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
(760) 322-8380
Marcus.Fuller@palmsprings-ca.gov
On Mar 21, 2016,at 6:37 PM, Kathie Hart<Kathie.Hart@palmsprings-ca.gov>wrote:
This agreement expired in Aug. 2014.
OK to close?
Kathie Hart, MMC
Chief Deputy City Clerk
City of Palm Springs (760) 323-8206
3200 E. Tahquitz Canyon Way :=- (760) 322-8332
Palm Springs, CA 92262 E Kathie.Hart@PalmSoringsCA.gov
City Hall is open 8 am to 6 pm, Monday through Thursday, and closed on Fridays.
<AEX32 Print.pdf>
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AGREEMENT#4124
M06458, 7-28-99
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING FOR A WASTEWATER
SERVICES AGREEMENT (DBOM) ("MOU") is made as of this 36 th day of July, 1999,
by and between U.S. FILTER OPERATING SERVICES, INC., a Delaware corporation
("Filter"), and the CITY OF PALM SPRINGS, CALIFORNIA ("City"). This Agreement is
made in reference to the following recitals.
Recitals
WHEREAS,
1. City owns and is currently operating the Treatment Facility, the Sewage
Collection System and the Down and Under System (the Sewage Collection System and the
Down and Under System shall sometirnes collectively be referred to herein as the "Related
Facilities").
2. Studies performed for the City suggested that an expansion of the
Treatment Facility from 10.9 mgd to 16.9 mgd was needed at a projected cost of$33,000,000. In
addition, as a result of Proposition 218, the City decided that a comprehensive review of the
existing rate structure was in order. Finally, the city decided to investigate privatization pursuant
to Government Code Section 5956.1 et sec
3. The City Council has determined that it desires to obtain the services of a
qualified organization experienced in the design, build, operation and maintenance of wastewater
facilities to provide engineering, design, construction, operation and maintenance services with
respect to the Treatment Facility and the Related Facilities. The City established an RFP Process
to select the best privatizer. Through the RFP process the City received various proposals
including proposals from Filter, the Desert Water Agency ("DWA") and others. As part of its
action on March 1999, and pursuant to State procurement statues and the Palm Springs
Municipal Code, the City Council selected Filter as the successful proposer with respect to such
design, construction, operation and maintenance services.
4. - As a result of the RFP Process, Filter and the City have entered into a five-
year interim management agreement, the Wastewater Services Agreement (O&M) of even date
herewith (the"O&M Agreement").
5. It is the intent of the City and Filter that the parties negotiate and enter into
a mutually satisfactory agreement (the "Long Term Agreement") to supercede the O&M
Agreement providing for the design and construction of an expansion of the Treatment Facility
and a 15 year operations and maintenance agreement with respect to the expanded Treatment
Facility and the Related Facilities in a manner which is consistent with the terms of this MOU.
Filter has proposed and the City has determined that a much smaller expansion from 10.9 mgd to
12.9 mgd (rather than 16.9 mgd) was sufficient at this time, at an estimated savings of
approximately $ 28,400,000. Once negotiated and documented, Filter shall execute the Long
Tenn Agreement and deliver such executed agreement to the City, but shall not be acted upon by
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City except pursuant to Recital 7 below.
6. The Long Term Agreement shall be entered into by the City pursuant to
both of California Government Code Section 5956.1 et.seq. and Chapter 3.12 of the Palm
Springs Municipal Code. Each of the foregoing statutes shall be independent authority for the
City to enter into the Long Term Agreement and to procure certain services with respect to the
Treatment Facility, and Related Facilities as described herein.
7. A Ballot Measure has qualified for the November 1999 ballot, which seeks
to prohibit the privatization and transfer of the Treatment Facility to a private entity. As the
Long Term Agreement will provide for a lease to Filter of the Treatment Facility and would be
inconsistent with the Ballot Measure, the parties have decided to negotiate the Long Term
Agreement but not enter into the same unless the Ballot Measure is defeated. The Ballot
Measure would only permit sale or lease to a public agency meeting certain criteria such as the
DWA. The City does not intend to contravene the will and decision of the citizens of the City
regarding the Ballot Measure. In the interim, the parties have negotiated a five-year O&M
Agreement for the management and operation of the Treatment Facility by Filter. Provided that
the Ballot Measure is defeated, the City shall execute the Long Term Agreement and the O&M
Agreement shall terminate as of the Long Term Agreement Commencement Date. Nothing
contained herein shall be construed so as to be inconsistent with such intent.
Agreement
NOW, THEREFORE, in exchange of the mutual promises contained herein and for
other good and valuable consideration, and intending to be legally bound, the Parties to this
MOU as follows:
ARTICLE I
PURPOSE
Section 1.1 Statement of Purpose. This MOU is intended to outline the terms of a
Long Term Agreement to be entered into should the Ballot Measure be defeated by the voters.
The goals of the Long Term Agreement, shall be to:
(a) Reduce the cost of operating the Treatment Facility so that the sewer rates
applicable to residents of the City can be reduced at least 25%.
(b) Provide for the operation, maintenance and, as necessary, modernization
of the 50-year old Treatment Facility, to employ current technology for the treatment of Influent
such that the Treatment Facility operates more efficiently and cost effectively; and ensure
compliance with current environmental rules and regulations.
(c) Provide for a design/build contract to reduce the cost of the necessary
expansion of the Treatment Facility and to carry out the expansion of the Treatment Facility from
10.9 mgd to 12.9 mgd, reducing the expansion from an original projection of 16.9 mgd.
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(d) Protect against potential contamination that may result from the
production of Effluent and solids that does not meet Environmental Laws and to protect the
City's groundwater.
(e) Provide for financing of the improvements to the Treatment Plant so as to
minimize any necessary adjustments to the sewer rates.
(f) Provide a means to protect the employment interests of current City staff
at the Treatment Facility through a contract providing for their continued employment at the
Treatment Facility.
The City and Filter acknowledge and agree that the goals set forth in this Section 1.1 represent
the mutual goals of the parties in pursuing a Long Term Agreement and do not represent a
contractual obligation of the City and Filter to achieve such goals. The City and Filter shall only
be bound and obligated by the terms, provisions and obligations set forth in the Long Term
Agreement.
Section 1.2 Citv's Economic Analysis. The City has considered other options for the
operation and maintenance of the Treatment Facility, and has found that Filter's proposal for the
long-term operation and maintenance of the Treatment Facility provides the residents of the City
of Palm Springs with the most benefits and lowest current and future rates. A comparison of the
proposals for the operation of the Treatment Facility in the short-term and long-term by Filter
and the operation by the Desert Water Agency has been prepared solely by the City and is
attached hereto as Exhibit B hereto.
ARTICLE II
INCORPORATION OF TERMS OF O&M AGREEMENT, ADDITIONAL
DEFINITIONS
Section 2.1 Incorporation of O&M Agreement Terms. The terms and provisions of
the O&M Agreement are incorporated by reference into this MOU and will be included within
the Long Term Agreement, except as noted herein. Initially capitalized terms not otherwise
defined herein shall have the meanings set forth in the O&M Agreement.
Section 2.2 Additional Definitions Applying to MOU. The following definitions
shall be applicable to this MOU:
"Existing Debt" means those certain $18,073,402.15 1989 Refunding Certificates of
Participation (Wastewater Treatment Plant) issued by the City.
"Floating Cap" has the meaning set forth in Section 5.4.
"Long Term Agreement Commencement Date" means the date on which the conditions
precedent set forth in Section 2.1 and Section 2.2 of the O&M Agreement, which sections shall
also be applicable to the Long Term Agreement, and Section 3.2 of this MOU have been satisfied
(or waived by the party having the right to do so).
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"Treatment Facility Expansion" has the meaning set forth in Section 5.1.
ARTICLE III
TERM, COMMENCEMENT, TERMINATION
Section 3.1 Term. The Term of the Long Term Agreement shall be 15 years and shall
commence on the Long Term Agreement Commencement Date.
Section 3.2 Additional Conditions to Commencement Date Under the Long Term
Agreement. The following conditions;precedent to the Long Term Agreement Commencement
Date shall be added in the Long Term Agreement to the conditions precedent to the City's
obligations set forth in Section 2.1 of the O&M Agreement and the conditions precedent to
Filter's obligations set forth in Section 2.2 of the O&M Agreement, which conditions precedent
shall be applicable to the Long Term Agreement unless mutually waived by the parties:
(a) Upon the mutual agreement of the parties, the successful completion of a
validation action with respect to the Long Term Agreement; and
(b) The defeasance and refinancing of the Existing Debt (unless the parties
mutually determine otherwise).
Section 3.3 Good Faith Negotiations. Both parties shall act in good faith in
connection with the negotiations for, and documentation of, the Long Term Agreement. Each
party shall use its best efforts to negotiate and finalize the Long Term Agreement within 120
days after the Commencement Date under the O&M Agreement.
Section 3.4 Termination Charges. Except as set forth in Exhibit A attached hereto,
the term "Termination Charges", as used in the O&M Agreement shall be capped in the Long
Term Agreement at One Million Thirty-Eight Thousand Dollars ($1,038,000) and shall be
reduced down to zero over the first six (6) years of the Term of the Long Term Agreement in the
manner set forth in Exhibit A. Notwithstanding the foregoing, prior to the execution of the Long
Term Agreement, the City and Filter shall, based upon the actual staffing situation at the
Treatment Facility and the amounts incurred by Filter as of the date of the execution of the Long
Term Agreement with respect to staffing and severances, discuss a modification to the amount of
the Termination Charges, if applicable, and shall mutually agree upon the exact amount of
Termination Charges and the form of Exhibit A that shall be applicable to the Long Term
Agreement. Additionally, if the Long Term Agreement is terminated before the expiration of the
15 year Term, City shall pay to Filter, within 30 days after the termination date, the unamortized
amounts relating to the Rolling Stock and the City's employee severance and benefits packages
(with respect to which Filter shall make the payment described in Section 6.1(e)below) that are
being amortized pursuant to the Annual Non-Employee Capital Recovery Component (the
payment of which by the City shall be in addition to any payment to Filter of any Termination
Charges. Annual Non-Employee Capital Recovery Component shall otherwise be treated in the
Long Term Agreement in the same manner as was the O&M Annual Capital Recovery.
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•
Section 3.5 Corporate Headquarters The provisions set forth in Section 13.5 of the
O&M Agreement concerning U.S. Filter Corporation's corporate headquarters shall be
applicable to the Long Term Agreement but shall run from the Long Term Agreement
Commencement Date; provided, however, that the period in which such provisions shall be in
effect shall be reduced by the period in which the O&M Agreement has been in effect. This
Section 3.5 shall be of no further force or effect after the expiration of the fourth year of the Term
of the Long Term Agreement.
ARTICLE IV
LEASE AND ADDED SERVICES
Section 4.1 Lease of Treatment Facility and License of Sewage Collection System
and Down and Under System. The Long Term Agreement shall provide for a lease by the City
to Filter of the Treatment Facility and the Treatment Facility Site and a license by the City to
Filter of the Sewage Collection System and the Down and Under System, in each case, upon
such terms as the City and Filter shall mutually agree upon and shall set forth in the Long Term
Agreement.
Section 4.2 Reclaimed Water System. It is the intent of the parties that the City and
Filter explore the beneficial use of Reclaimed Water in connection with the treatment of Influent
at the Treatment Facility. The Long Term Agreement shall set forth the obligations of the City
and Filter in connection with (i) any studies, analyses and reports to be performed in connection
with the possible creation of a Reclaimed Water system; (ii) any discussions with the Desert
Water Agency, any other applicable Governmental Agency and/or any other party in connection
with the possible creation of a Reclaimed Water system; and (iii) the general parameters of each
party's obligations in the event a Reclaimed Water system is created.
Section 4.3 Rolling Stock. The Long Term Agreement shall provide for the sale and
transfer by the City to Filter of the Rolling Stock. Filter shall purchase from the City and the
City shall sell to Filter, the Rolling Stock, free and clear of all liens and encumbrances, for an
amount equal to $240,000. The purchase price shall be paid to the City on or before the Long
Term Agreement Commencement Date. The City and Filter shall execute such bills of sale,
assignments and such other documentation as is customary, reasonable and/or necessary to effect
the sale and transfer of the Rolling Stock to Filter.
Section 4.4 Community Services. Filter shall provide community services in the
manner and scope set forth at Exhibit C.
ARTICLE V
EXPANSION, FINANCING AND EXISTING DEBT
Section 5.1 The Treatment Facility Expansion. It is the parties' intent that the
Treatment Facility be expanded from 10.9 mgd to 12.9 mgd (the "Treatment Facility
Expansion"). The design features, design parameters, construction schedule, design approval
process, change order process and permitting obligations and process with respect to the
Treatment Facility Expansion shall be mutually agreed upon by the City and Filter and shall be
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set forth in the Long Term Agreement. The cost of the Treatment Facility Expansion shall be
$4,845,000, excluding financing costs, and is based upon the Treatment Facility Expansion being
undertaken in the manner set forth in Filter's response to the City's request for proposal. If the
City and Filter make mutually acceptable alterations to the Treatment Facility Expansion, as
described in Filter's response to the City request for proposal, the parties shall adjust the
foregoing cost figure.
Section 5.2 Permitting for the Treatment Facility Expansion.The Long Term
Agreement shall set forth the obligations of the City and Filter in connection with the
procurement of permits for the Treatment Facility Expansion, including, without limitation, the
modification of the City's existing environmental impact report relating thereto.
Section 5.3 Financing of Treatment Facility Expansion.. It is the parties intent that
the Treatment Facility Expansion be financed in a mutually acceptable manner(which financing
may be pursuant to (i) a municipal or capital lease between the City and a lender to be
determined, (ii) taxable bonds; or(iii) such other financing vehicle as the parties may mutually
agree). The City and Filter acknowledge and agree that the procurement of mutually satisfactory
financing for the Treatment Facility Expansion shall be a condition precedent to the parties'
obligations to proceed with the design and construction of the Treatment Facility Expansion.
The City and Filter shall cooperate in connection with securing the financing for the Treatment
Facility Expansion. The Long Term Agreement shall provide for and describe the financing for
the Treatment Facility Expansion. In no event shall Filter be obligated to provide the financing
for the Treatment Facility Expansion.
Section 5.4 Sewage Collection System and Down and Under System Caps. The
formula set forth in Section 5.4(f) of the O&M Agreement with respect to Filter's obligations
relating to the Sewage Collection System and the Down and Under System shall apply to the
Long Term Agreement, except for the following changes:
(a) Monetary Cap. Filter's maximum monetary obligations for providing the
services described under Sections 5.4(d)-(e) of the O&M Agreement shall be increased from
$150,000 to $450,000, subject to the provisions of 5.4(b) below.
(b) Expenditure Limitation for First Five Years of Term. Notwithstanding the
provisions of this Section 5.4, Filter's monetary obligation for items set forth in Section 5.4(f) of
the O&M Agreement, which shall be applicable to the Long Term Agreement, shall be limited to
$30,000 per year for the first five years of the Term, for a total of$150,000. After the fifth year
of the Term, Filter's monetary obligations hereunder shall be increased to an amount equal to
$450,000 less any amounts paid during the first five years of the Term and shall be calculated
pursuant to the formula set forth at Section 5.4 of the O&M Agreement, which shall be
applicable to the Long Term Agreement.
In no event, however, shall Filter be obligated to incur more than $450,000 in costs during the
Term of the Long Term Agreement. Except as described in this Section 5.4, the other provisions
of Section 5.4(f) shall be applicable to the Long Term Agreement.
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Section 5.5 Existing Bond Debt. The City and Filter shall mutually analyze and
review the Existing Debt to determine how best to handle the Existing Debt in light of the
transactions contemplated by the Long Term Agreement. If the parties determine that defeasance
of the Existing Debt is necessary, the City and Filter shall cooperate in undertaking such
defeasance in a timely manner, including, without limitation, determining a source of financing
for the defeasance (which financing may be pursuant to (i) a municipal or capital lease between
the City and a lender to be determined, (ii) taxable bonds; or (iii) such other financing vehicle as
the parties may mutually agree). The Long Term Agreement shall provide for and describe the
financing for the defeasance of the Existing Debt (if determined necessary by the City and
Filter). In no event shall Filter be obligated to provide the financing for the defeasance or
refinancing of the Existing Debt.
ARTICLE VI
COMPENSATION AND OTHER PAYMENTS
Section 6.1 Filter Payments to City. In consideration for certain benefits granted and
provided by the City to Filter, the Long Term Agreement shall provide that Filter shall make the
following payments to the City.
(a) Land Lease Payrnent to the Airport. Commencing on the July 1 following
the first anniversary of the Long Term .Agreement Commencement Date, and annually thereafter,
Filter shall pay to the City, in arrears, the lease payment for that portion of the Treatment Facility
and Related Facilities upon property owned by the Palm Springs International Airport, a
department of the City, in the amount of$522,720 for each of the first five years of the Term,
plus any increase based on CPI, beginning on July 1, 2006 and each July 1 thereafter.
(b) Annual Overhead and Administration Fee. Commencing on the July 1
following the first anniversary of the Long Term Agreement Commencement Date, and annually
thereafter, Filter shall pay to the City in arrears an annual fee in the amount of$150,000 per year
to help defray and reimburse the City for the overhead, administrative, monitoring and personnel
costs that the City will incur as a result of, or allocate to, the Long Term Agreement and the
parties' performance thereunder.
(c) - One-Time Employee Capital Payment. Concurrent with the Long Term
Commencement Date, Filter shall pay to City $350,000 to compensate City for certain employee-
related costs and expenses.
(d) Limitation on Payments by Filter to City. If, as of the date that any of the
payments described in this Section 6.1 are due and payable, the Service Fee and any other
amount due and payable to Filter under the Long Term Agreement have not been paid in full,
Filter shall be entitled to defer such payment(s) until such time as Filter has been paid in full.
(e) Payments Until July 1, 2000. The payments under Sections 6.1(a)-(b) and
Sections 6.6-6.7 for the period between the Long Term Agreement Commencement Date and
July 1, 2000 shall be a prorated amount. of the foregoing, based on the full months elapsed during
such period.
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Section 6.2 Service Fee. In lieu of the O&M Fee, the O&M Annual Capital
Recovery, the O&M Fixed Component and the O&M Variable Component, the Long Term
Agreement shall provide for a Service Fee, Annual Non-Employee Capital Recovery
Component, Annual Employee and Soft Costs Capital Recovery Component, Fixed Component
and Variable Component.
(a) Fixed Component. The Fixed Component of the Service Fee shall be in an
amount equal to (i) $195,308.75 per month from and after the Long Term Agreement
Commencement Date until June 30, 2000, plus any possessory interest tax and annual business
license fee set forth in Sections 6.6 and 6.7; (ii) $2,385,479 ($198,789.92 per month) for the
period of July 1, 2000 until June 30, 2001, plus any possessory interest tax and annual business
license fee set forth in Sections 6.6 and 6_7; and (iii) $2,428,299 ($202,358.17 per month) for the
period of July 1, 2001 until June 30, 2002, plus any possessory interest tax and annual business
license fee set forth in Sections 6.6 and 6.7, and, thereafter, commencing on July 1, 2002, and
each July 1 thereafter, the Fixed Component of the Service Fee shall be adjusted in accordance
with the provisions of Section 7.2 of the O&M Agreement, which provisions shall be applicable
to the Long Term Agreement. The Fixed Component of the Service Fee is based upon the
operations and maintenance of the Treatment Facility, as it exists as of the date hereof, except as
expanded pursuant to a Treatment Facility Expansion being undertaken in the manner set forth in
Filter's response to the City's request for proposal. Other than as set forth herein, the Fixed
Component of the Service Fee shall be treated in the Long Term Agreement in the same manner
as was the O&M Fixed Component.
(b) Annual Non-Employee Capital Recovery Component. As of the date hereof,
the Annual Non-Employee Capital Recovery Component of the Service Fee is estimated at
$59,170 per year($4,930.83 per month). The Annual Non-Employee Capital Recovery
Component does not contemplate any financing by Filter for the Treatment Facility Expansion or
the defeasance and/or refinancing of the Existing Debt. If Filter provides financing for the
Treatment Facility Expansion and/or the defeasance and/or refinancing of the Existing Debt, the
Annual Non-Employee Capital Recovery Component shall be adjusted to reflect such financing..
(c) Annual Employee and Soft Costs Capital Recovery Component. As of the
date hereof, the Annual Employee and Soft Costs Capital Recovery Component of the Service
Fee is estimated at $183,307 per year ($15,275.58 per month), subject to re-negotiation by the
parties pursuant to Section 3.4. The Annual Employee and Soft Costs Capital Recovery
Component shall only be due and payable by the City to Filter during the first seven(7) years of
the Term of the Long Term Agreement. Upon the expiration of the seventh(7th)year of the
Term of the Long Term Agreement, the City shall not be obligated to continue payments of the
Annual Employee and Soft Costs Capital Recovery Component. The Annual Employee and Soft
Costs Capital Recovery Component shall otherwise be treated in the Long Term Agreement in
the same manner as was the O&M Annual Capital Recovery.
(d) Variable Component. The Variable Component of the Service Fee shall
be treated in the Long Term Agreement in the same manner as was the O&M Variable
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Component, except that the initial Variable Rate shall be the Variable Rate that was in effect
under the O&M Agreement as of the date it is terminated.
Section 6.3 Additional Compensation Adiustments. In addition to the adjustments
to Compensation set forth in Section 7.4 of the O&M Agreement, which adjustments shall also
be applicable to the Long Term Agreement, the Long Term Agreement shall provide that the
Fixed Component of the Service Fee shall be increased to take into account changes, after the
execution of the Long Term Agreement, in the (i) design of the Treatment Facility Expansion;
(ii) permitting requirements for the Treatment Facility Expansion and (iii) the City's insurance
requirements (as described in Section 7.1 below), provided that cap and amortization schedules
may be negotiated to the mutual agreement of the parties, and no party shall proceed until
agreement is achieved.
Section 6.4 Compliance with Government Code Section 5956.1 et. seq.. The Long
Term Agreement will include provisions that comply, and are consistent, with the requirements
and provisions of Government Code Section 5956.1 et. sec..
Section 6.5 Annual Audit. The Long Term Agreement shall provide that,by April 30
of each year during the Term of the Long Term Agreement, Filter shall provide to the City an
annual audited report for the prior calendar year, setting forth the User Fees received by the City
during such calendar year (which shall be based exclusively on information provided to Filter by
the City on or before February 15 of each year) and the expenses incurred by the City under the
Long Term Agreement in connection with the Treatment Facility, the Sewage Collection System
and the Down and Under System. Filter shall made the annual audited report available to any
member of the public who requests such report at a cost not to exceed the cost of reproduction of
the report.
Section 6.6 Possessory Interest Tax. Commencing on the July 1 following the first
anniversary of the Long Term Agreement Commencement Date, and annually thereafter, Filter
shall pay to the County of Riverside, in arrears, the possessory interest tax levied by the County
of Riverside, which City estimates to be approximately $100,000. Filter shall pay any increases
in the possessory interest tax from that estimated herein. The possessory interest tax shall be a
pass through tax from the rate payers.
Section 6.7 Annual Business License Fee. Commencing on the July 1 following the
first anniversary of the Long Term Agreement Commencement Date, and annually thereafter,
Filter shall pay to the City, in arrears, an annual business license fee in the amount set in the
City's Comprehensive Fee Schedule for Filter's performance of the services under the Long
Term Agreement.
Section 6.8 Cap on Compensation. Section 7.5 of the O&M Agreement shall not be
applicable to the Long Term Agreement.
Section 6.9 Treatment Facility Expansion. The City shall pay to Filter the
compensation set forth in Section 5.1 with respect to the Treatment Facility Expansion pursuant
to procedures to be mutually agreed upon in the Long Term Agreement.
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ARTICLE VII
INSURANCE. INDEMNITY AND VALIDATION
Section 7.1 Insurance Requirements. City may require an increase in the amounts of
insurance and type of coverage provided in the O&M Agreement as such amounts are reasonably
determined by City to provide for increases in cost-of-living, liability experience, and the market
place for insurance. The Long Term Agreement shall create a process for evaluating the need for
modifications to the insurance requirements, with disagreements subject to dispute resolution. If
the City requires such an increase in insurance, Filter's Compensation shall be increased to
reflect the increased costs of procuring such insurance. Filter shall provide to City appropriate
documentation to demonstrate an actual increase in such costs.
Section 7.2 Cap on Filter Damages, Liability and Indemnification Obligations.
Section 10.1(c)(iv) of the O&M Agreement, as included in the Long Term Agreement, shall be
revised by substituting $30,000,000 for$10,000,000.
Section 7.3 Validation of Agreement. If the parties mutually agree to pursue a
validation action as set forth at Section 3.2(a), the parties shall promptly initiate and pursue a
validation action with respect to the Long Term Agreement following the execution thereof.
Filter agrees to pay for the first $100,000 of attorneys' fees and costs in connection with the
validation action and, thereafter, such fees and costs shall be borne equally by the City and Filter.
Should the Long Term Agreement be invalidated by a court of competent jurisdiction as a result
of such validation action, the parties shall meet and confer to attempt to correct whatever aspects
of the transaction let to the determination that it violated existing law, at the same time achieving
a recovery of the parties' relative benefit of the bargain in entering the Long Term Agreement. If
the parties are unable to agree upon such changes to the Long Term Agreement within ninety
(90) days of the invalidation then the parties will continue to perform their obligations pursuant
to the O&M Agreement. Filter shall not be entitled to recover any portion of the costs it incurs
hereunder. The validation action shall be undertaken by Rutan & Tucker, or such other counsel
selected by the City and reasonably acceptable to Filter(with such representation to be
undertaken at the rates at which Rutan & Tucker or such other counsel charges the City for legal
work of that nature). Filter, at its cost, shall be entitled to have its own counsel participate in the
validation proceeding in such manner as Filter, in its sole discretion, desires. If a validation is
pursued by the parties, the successful validation of the Long Term Agreement shall be a
condition precedent to the Long Term Agreement Commencement Date and the parties
obligations thereunder. Filter, at any time during the validation action, shall have the right, in its
sole discretion, to terminate the Long Term Agreement, in which case, Filter's obligation to fund
the validation action as set forth in this Section 7.3 shall immediately cease and terminate.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Other Provisions. The City and Filter acknowledge and agree that, as
they proceed with the negotiations for, and documentation of, the Long Term Agreement,
additional provisions that were not included in the O&M Agreement (or were included in the
O&M Agreement but deviate from the provisions set forth in the O&M Agreement) and which
are not referenced in this MOU may need to be included in the Long Term Agreement in order to
effect the transactions intended by the parties under the Long Term Agreement. The parties shall
act reasonably and in accordance with Section 3.3 in connection with the negotiation and
resolution of such additional issues.
Section 8.2 Execution in Counterparts. This MOU may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which together shall be
deemed to be one and the same instrument.
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0 0
IN WITNESS WHEREOF, the parties have hereunto entered into and executed this MOU, by
their duly authorized representatives, as of the date first above written.
CITY
CIT F PALM SPRIN S municipal
co oration
City Manag
ATTEST:
APPROVED By �HE CITY COUNCIL
ax'R . �0.' y59' 7 z -s,7
City Clerk yy�p —�'�' `
APROVED AS TO FORM:
Cit torney
FILTER
U.S. FILTER OPERATING SERVICES,
INC., a Delaware corporation
By:
Name: eit-4,«
Title: CCC `�01
,r
Name:
Title: 'Vr'C'i�
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EXHIBIT A
TERD 1NATION CHARGES
The Termination Charges shall be equal to $1,038,000, which amount shall be reduced
monthly be an amount equal to $17,300 multiplied by the full months of the Tenn of the
Long Tenn Agreement that have elapsed.
In addition to the foregoing, City will pay to Filter an additional amount equal to the
amount determined pursuant to Section 5.4(f) of the O&M Agreement(which formula
shall be consistent with the tenns of this MOU).
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EXHIBIT B
CITY'S ECONOMIC ANALYSIS
USFOS USFOS
Short Term Long Term DWA
(as of the date of (as of the date of (as of March 6, 1998)
execution of the execution of the MOU)
Wastewater Services
Agreement)
TYPE ACTIVITY Operation and Design,Build, Sale with non-
Maintenance Agreement Operation and continuing oversight by
Maintenance under a City
Lease
TERM 5 years 15 years Ownership Transfer
EXISTING CLIENT Continue Paying Continue Paying Forgive
LOANS
OWNERSHIP City City DWA
RATE SETTING City City DWA
RESERVES Use to Pay off Bonds Use to Pay off Bonds Transfer reserves to
DWA
EXISTING BONDS Kept in Place Pay off No Commitment
(City continue to be
responsible?)
RATES No change Estimated 18-32% No increase for 2 years
overall reduction
SEWER No change Estimated 40% 50%reduction
CONNECTION FEE reduction
PROPOSED# 12*" 12** 24
EMPLOYEES
*Plus CPI adjustments.
**NOTE: All existing employees guaranteed continued employment if they so chose.
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EXHIBIT C
COMMUNITY SERVICES
Filter shall perform the following Community Services as a corporate expense, and Filter
shall not be entitled to recover any costs therefor. Filter's commitment to provide the
following services shall supercede any prior oral discussions or written agreements
between Filter and City before the date of this MOU. Filter may, at its sole option,
provide additional community services than those listed herein. Every five (5) years of
the Term, all amounts to be donated by Filter, as designated below, shall be increased by
10%.
1. Culligan Facility Located in the City: So long as the operations of the plant are
permissible and in accordance with City codes, or, if not, the City passes a variance or
other ordinance permitting such operations (without requiring any exactions or fees from
Filter in connection therewith), Filter within 18 months of the Long Term Agreement
Commencement Date, will locate a Culligan Facility in the City. The Culligan Facility
will be approximately 15,000 square feet on approximately 1 acre.
2. Plant and Visitor Center Tours of the Treatment Facility: Within 24 months of
the Long Term Agreement Commencement Date, Filter shall create a visitor's center, and
outdoor classrooms and exhibit area capable of accommodating at least 25 visitors at the
Treatment Facility. Periodic tours of the Treatment Facility will be conducted form the
visitor center. The design and layout of the visitor center shall be reviewed by the City
Council.
3. Student Internships: Student internships for 5 City college and high school
students per year at Filter facilities.
4. Virtual University: Subject to the five-year increases set forth above, Filter shall
donate $10,000 per year to the Virtual University. Should the Virtual University fails to
be successfully implemented or ceases operations at any time during the Term, Filter
shall be required to transfer the donation to another agency within the City and designated
by the City Council, which has the same general purpose. Should the City wish to have
the obligations transferred to any other entity, other than as described above, such transfer
shall require the prior written consent of Filter, which shall not be unreasonably withheld.
5. VIPS and Volunteer Services Program: Filter shall provide volunteer services for
at least an average of one day per week (based upon an 8 hour day) for the entire Term of
the Agreement for community needs, including but not limited to park, recreation, and
social service needs; youth, disadvantaged and senior needs; educational needs;
community-based organization needs; assistance to non-profit and charitable
organizations; community events; public safety needs; City programs; water reclamation,
materials recycling and environmental remediation needs; programs at the Virtual
University; VIPS Programs; and programs similar to the foregoing. Filter shall work in
conjunction with the City in connection with the creation and sustainability of volunteer
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0 •
service programs organized through VIPS, which will serve as an umbrella organization
for volunteer work within the City. At Filter's election, Filter may, in lieu of donating
such volunteer time, contribute monetarily to community programs mutually acceptable
to the City and Filter. If Filter elects to contribute monetarily in whole or in part to
satisfy its obligations under this Section 5, each hour shall be valued in an amount as
reasonably agreed upon by the parties.
6. Donations to Community-Based Organizations and Events. Filter shall annually
make donations aggregating to $5,000 for those purposes specified in paragraph 5 above,
to such organizations, programs and events as shall be designated by the City Council.
Although the programs may relate to water, reclamation and Treatment, the City Council
is free to designate any of the purposes broadly stated in paragraph 5. In addition, Filter
shall annually donate used equipment and educational materials having a then current
value of$2,500, for a total donation hereunder of$7,500, subject to the five-year
increases set forth above. Filter shall annually document the recipients of donations
hereunder and the value thereof.
7. DARE: Annual donation of at least $2,500 to DARE or other program related to
community safety designated by the City Council.
8. Web Site: Within 6 months, creation of water web site with tie in to City's web
site.
9. Economic Development: Cooperation with the City in recruiting industry and
business to the City. This commitment includes attending meetings with city staff and
new or existing businesses to provide materials concerning services and charges, as well
as the availability of upper management to promote the community.
10. Chamber of Commerce: Corporate membership in the City's Chamber of
Commerce and involvement in other local civic groups.
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